Nelson Peltz’s Newest Bet: Bank of New York Mellon

Nelson Peltz‘s Trian Fund Management LP has announced its latest foray into a financial stock: Bank of New York Mellon Corp. The activist fund has built a stake worth $1.05 billion in the bank. Shares of the bank rose nearly 3% on news of Mr. Peltz’s position.

According to the WSJ, Mr. Peltz wants to discuss ideas for creating more shareholder value, but hasn’t had conversations with management yet.

While Mr. Peltz is generally better known for agitating for change at consumer products companies and retailers including Wendy's Co., PepsiCo Inc., and H.J. Heinz Co., his fund has been one of the busiest activists in the financial sector. Trian has invested in the Bank of New York’s rival State Street Corp., asset manager Legg Mason Inc., and in the investment bank Lazard Ltd.

What will Mr. Peltz push for at BNY? If his investments in other financial firms are any guide, he might have the best luck getting the bank to agree to operational changes.

At State Street, Trian was able to convince management to accept its plans for cost cuts and a share-repurchase program, but had no success pushing for a slim down of the bank. Trian couldn’t convince State Street to separate its giant investment management arm, State Street Global Advisors. Trian exited its position in State Street in late 2013.

At Lazard, following Trian’s investment and push for board changes, the investment bank cut the CEO’s pay in 2013 and put other restrictions on compensation for top executives. Additionally, Lazard cut more than $100 million in operational expenses, largely through staff cuts.

Bank of New York Mellon has made significant changes this year. It said in May that it would sell its corporate trust unit, and it sold its corporate headquarters building for $585 million. Over the last year, Bank of New York Mellon shares are up about 34%, outpacing both the S&P 500 and the KBW Bank Index, a collection of banking industry stocks.

Trian was able to avoid disclosing its position in Bank of New York Mellon until today because of an Securities and Exchange Commission waiver. Trian would normally have been forced to reveal its position by mid-May,since large funds are required by law to publish their holdings quarterly. Yet, the SEC occasionally grants funds waivers so they can be exempt from such reporting requirements as they build their stakes. That waiver from the SEC expired today.